201 S. Anaheim Blvd.
Suite #501
Anaheim, CA 92805
Tel: (714) 765-5111
Fax: (714) 765-5215
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
HUMAN RESOURCES DEPARTMENT
DATE: AUGUST 29, 2023
FROM: HUMAN RESOURCES DEPARTMENT
SUBJECT: 2024 HEALTH AND WELFARE PLAN CARRIERS AND RATES ATTACHMENT (Y/N): YES ITEM # 13
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion, approve the 2024 Health and Welfare Plan Carriers and Rates as listed on Attachment “A” and authorize the Human Resources Director, or designee, to enter into and execute all required provider agreements as well as take any and all actions necessary to implement and administer the agreements.
DISCUSSION:
The City provides a comprehensive health and welfare program with various options covering medical, dental, vision, wellness, and life and disability coverage for eligible active employees, as well as access to medical and dental group coverage for qualifying retirees. Each year, the City of Anaheim reviews its health and welfare benefits to determine the best plan options, associated rates, and to manage overall employee/employer costs and employee satisfaction. This review is accomplished by Human Resources staff in concert with the City’s insurance broker and the Anaheim Health Council, an advisory body comprised of city employees representing each bargaining unit.
The medical plan with the highest City employee enrollment is Kaiser Health Maintenance Organization (HMO) plan. Kaiser initially projected the renewal increase at approximately 19%. However, the City successfully negotiated a 2024 increase of 12%.
Besides the Kaiser plan, City employees may choose coverage under two alternate HMO options provided by Blue Shield as well as two Blue Shield Preferred Provider Organization (PPO) options. The City negotiated a 17.88% average increase from current rates for the 2024 Blue Shield plans. These increases are driven primarily by claims experience, including significant inpatient hospitalizations and pharmacy claims.
City renewal increases are comparable with those experienced by other employers throughout California as a result of upward rate trends and inflation in the medical industry. Employee monthly cost increases will range from $15.54 to $57.48 for employee only coverage and from $44.02 to $162.86 for family coverage. City contributions will increase in the range of $60.51 to $198.97 for employee only coverage and $171.19 to $562.92 for family coverage.
2024 Health and Welfare Plan Carriers and Rates
August 29, 2023
Retiree medical renewals for the 2024 plan year will increase by approximately 13% on average, across all plans. This represents a slight increase in comparison to the 4% average increase for the 2023 plan year. In an effort to offer an additional Medicare advantage plan with nationwide coverage options, a Request for Proposals (RFP) was issued to five medical carriers for the 2024 renewal period. After analyzing the responses for cost, plan design, network size, and provider/pharmacy disruption, Humana was identified as the best option for City retirees. Retirees who choose this plan will see premiums 40% below the current PPO monthly premiums, as well as several plan design enhancements including wellness benefits and medical appointment transportation. Additionally, the Humana plan has an HMO-like fee structure that makes it easy to predict and budget medical expenses while enjoying the freedom that comes with a PPO plan.
For the City’s Dental insurance plans, after evaluating the existing services along with vendor performance provided by Delta Dental, a Request for Information (RFI) was issued for the 2024 renewal period. This process revealed that alternative rate options, network disruption and impact to members, and plan design discrepancies, leave Delta Dental as the best option for the City as they have the largest dental network and provider match for the City’s enrolled population. HMO Dental rates will remain unchanged for 2024. The City’s self-funded PPO monthly premium will also remain unchanged for 2024. Additionally, Delta Dental, the City’s claims administrator for the PPO, will provide a rate pass guarantee for the next 24 months for the Administrative Services Only (ASO) fee.
In order to continue its existing program offerings under the Live Well Anaheim wellness program, the City will be renewing its contract with Vitality for an additional 3- year term. Through negotiations, this renewal will result in eight percent (8%) savings from current rates which is approximately a $24,000 savings over the 3-year term.
Vitality’s fees are paid through a wellness stipend provided by Blue Shield.
Regarding the City’s group life insurance and disability coverage offered through The Hartford, the City was able to successfully negotiate a rate pass on all life insurance and short-term disability premiums with a 3-year rate guarantee. For long term disability, the City negotiated a 10% rate reduction with a 3-year rate guarantee resulting in a savings of approximately $190,000 over the 3-year term.
The remaining health and welfare plans including Flexible Spending Account (FSA), Health Savings Account (HSA), Consolidated Omnibus Budget Reconciliation Act (COBRA) programs, and the City’s Employee Assistance Program (REACH) remain at the 2023 rates with no changes for 2024.
IMPACT ON BUDGET:
Sufficient funds for employee Health and Welfare Programs are included in the Human Resources Department’s Fiscal Year 2023/24 Employee Benefits Fund budget. 2024 Health and Welfare Plan Carriers and Rates
August 29, 2023
Respectfully submitted,
Gretchen R. Beatty
Acting Human Resources Director
Attachment:
1. Health & Welfare Plan Carriers and Rates – 2024